Friday, 21 November 2008

Clinton accepts Obama secretary of state offer: NY Times

WASHINGTON (Reuters) - New York Sen. Hillary Clinton has accepted an offer from President-elect Barack Obama to become U.S. secretary of state, joining her former Democratic rival to help guide U.S. foreign policy, the New York Times said on Friday.

The newspaper quoted two Clinton associates who said she came to her decision after additional discussions with Obama about the nature of her role as the top U.S. diplomat and his foreign policy plans.

"She's ready," one of the sources told the newspaper, which posted the report on its website.

Clinton emerged as a frontrunner for the secretary of state job late last week, transfixing a country which had seen her compete hard against Obama to win the Democratic nomination for the presidency. Obama clinched that nomination in June and then beat Republican John McCain in the November 4 election.

Democratic Party sources have recently said Clinton, was on track to be nominated, with an official announcement expected after the November 27 Thanksgiving holiday.

NBC news meanwhile also reported two other key Obama appointments: New York Federal Reserve President Timothy Geithner as treasury secretary, and New Mexico Gov. Bill Richardson as commerce secretary. NBC said official announcements on the appointments were expected on Monday.

Officials with the Obama transition team had no immediate comment.

Clinton has a global profile both as a political leader in her own right and as the wife of former U.S. President Bill Clinton.

Policy analysts say her selection as secretary of state could mean a more hawkish U.S. stance, noting that she has been more reluctant than Obama to commit to a firm timetable for withdrawing U.S. troops from Iraq.

Buy Unichem Labs, target of Rs 270: Karvy

Karvy Stock Broking has maintained its buy rating on Unichem Laboratories with a target price of Rs 270 in its November 21, 2008 research report. "We have decreased our formulations exports by 9 % to Rs 900 million for FY09 while we have maintained domestic API revenues of Rs 200 million for FY 09 and FY 10 respectively. We have also marginally decreased our R & D expenses for FY 2009 while we increase our personnel expenses for FY 2010 in lieu of higher increment in next year. In FY 2009 the company's personnel cost are not anticipated to increase much as the company's performance was subdued in FY 2008. We have marginally increased our EPS estimates for FY 2009 by 0.8% to Rs 26.3 and have reduced our EPS for FY 2010 by 3.6 % to Rs 34.8. We maintain BUY rating on the stock with a price target of Rs 270 based on 7.75x (FY 2010E EPS Rs 34.8)," says Karvy's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy BPCL: Indiabulls Securities

Indiabulls Securities Research has upgraded its rating on Bharat Petroleum Corporation (BPCL) to buy in its November 20, 2008 research report. "Bharat Petroleum Corporation Limited (BPCL) reported a net loss of Rs 26.3 billion for Q2’09 on account of higher under-recoveries (Rs 102.8 billion) and inventory losses (Rs 6.1 billion), caused by higher crude oil prices. We have revised our estimates to incorporate the affect of the falling crude oil prices and the depreciating rupee. Based on our valuation, we have arrived at a fair price value Rs 370, implying an upside potential of 18.3%. Thus, we upgrade our rating on the stock to Buy," says Indiabulls Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy JK Tyre, target Rs 57: Angel

Angel Broking has recommended a buy rating on JK Tyre and Industries with a target of Rs 57 in its November 21, 2008 research report. "The current global economic situation also hampers the possibility of large scale exports, though the global price is higher by Rs 22 per kg (Bangkok — Rs 87) than the price in the Indian market. But, there is no hurry in the industry, especially the tyre manufacturers, to stock rubber heavily. The Tyre industry strongly believes that the price would further decline and Rs 50 seems to be within reach. We recommend a Buy on JK Tyre with target price of Rs 57," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy IVRCL Infra on declines: India Infoline

India Infoline has recommended to buy IVRCL Infrastructure and Projects on declines with a stoploss of Rs 108 and target of Rs 130 in its November 21, 2008 research report. "The stock has witnessed a sharp fall from the levels of Rs 299 from second week of September 2008 to a low of Rs 57 in last week of October 2008. Since then, the stock has made a strong recovery. However, the rally proved to be short-lived as it faced stiff resistance around the levels of Rs 160, pulling the stock lower."

"Despite the ongoing volatility, the stock has managed to hold on to its short-term support trendline. In last few sessions, it has made a promising recovery with impressive volumes. It will complete a bullish breakout if it crosses the levels of Rs 123. Based on above technical analysis, we recommend traders to buy the stock on declines up to the levels of Rs 113. Keep a stop loss of Rs 108 for a short-term target of Rs 130," says India Infoline's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Ceat, target of Rs 43: Angel

Angel Broking has recommended a buy rating on Ceat with a target price of Rs 43 in its November 21, 2008 research report. "The current global economic situation also hampers the possibility of large scale exports, though the global price is higher by Rs 22 per kg (Bangkok — Rs 87) than the price in the Indian market. But, there is no hurry in the industry, especially the tyre manufacturers, to stock rubber heavily. The Tyre industry strongly believes that the price would further decline and Rs 50 seems to be within reach. We recommend a Buy on CEAT with target price of Rs 43," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy ONGC: Angel

Angel Broking has maintained its buy rating on Oil and Natural Gas Corporation (ONGC) in its November 21, 2008 research report. "Oil & Natural Gas Corporation (ONGC) and its partners have bagged 20 out of the 44 blocks that have been awarded under the seventh round of the New Exploration Licensing Policy (NELP-VII). The Cabinet Committee on Economic Affairs (CCEA), which met on Thursday (November 20), decided to award 44 out of the 45 oil and gas blocks to the first ranked/sole bidders, while not awarding the Mumbai Basin Deep Water-2005/8 block to the sole bidder, Cairn Energy India - Cairn India (CEIL-CIL). The second biggest winner was the first-timer BHP Billiton Petroleum International-GVK Infrastructure Oil & Gas consortium, which was awarded seven deep-water blocks."

"The Centre had launched the NELP-VII on December 13, last year, offering 57 exploration blocks, which included 19 deep-water, nine shallow-water and 29 on-land blocks. The bids were opened on June 30. In all, 181 bids were received from 95 companies for 45 blocks (12 deep-water, seven shallow-water and 26 on-land). The Production Sharing Contracts (PSC) for the 44 blocks is likely to be signed within a month. Total investment commitment for Phase-I of exploration of these blocks is around USD 1.5 billion. We maintain a Buy on ONGC," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Hold Wipro, target of Rs 242: Indiabulls Securities

Indiabulls Securities Research has maintained its hold rating on Wipro with a target price of Rs 242 in its November 20, 2008 research report. "For Q2’09, Wipro Limited (Wipro) reported a modest sequential growth of 8.3% in its top line to Rs 65.4 billion, driven by a 1.5% increase in the sales volume, a 1.8% improvement in price realisation, and the depreciation of the rupee. Based on our DCF valuation, we have arrived at a target price of Rs. 242, assuming an 8% Rf, a 13% WACC, and a 5% terminal growth rate. Our fair value estimate provides only a 10.4% upside over the current levels; thus, we maintain our Hold rating for the stock," says Indiabulls Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

DLF a top pick: Motilal Oswal

According to Motilal Oswal's report, the research firm's top picks are DLF among the large caps, and Indiabulls Real Estate (IBREL), Mahindra Lifespace Developers and Bombay Dyeing and Manufacturing Company among midcaps.

Motilal Oswal's Report:

According to Motilal Oswal's report, we expect FY09 to be a year of consolidation, in which industry leaders would be differentiated from peers. We believe developers with staying power would utilize this consolidation phase to emerge stronger and position themselves in an advantageous manner to capitalize on the growth phase post consolidation. Focus on companies with: (1) high visibility on monetization of assets over the next 3-5 years; (2) low leverage and robust financials; and (3) strong execution track record. Our top picks: DLF among the large caps, and IBREL, Mahindra Lifespaces and Bombay Dyeing among midcaps.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Triveni Engineering, target of Rs 45: PINC Research

PINC Research has upgraded its rating on Triveni Engineering to buy with a target of Rs 45 in its November 21, 2008 research report. "Triveni Engineering and Industries Ltd. (TEIL) reported a YoY growth of 41% in net sales to Rs 4.3 billion for Q4FY08. Net profits surged by 5.4x to Rs 270 million. Although we expect the profitability to be impacted by higher cane price, we believe the same would be partially compensated by liquidation of low cost sugar of SS 07-08 and better distillery product prices. Hence, we upgrade our recommendation to ‘BUY’ with a price target of Rs 45 (valuing at 6.5x) on a one year investment perspective," says PINC's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Time Techno, target of Rs 50: PINC Research

PINC Research has maintained its buy rating on Time Technoplast with a target of Rs 50 in its November 21, 2008 research report. "We have moderated our outlook primarily due to the deteriorating economic conditions. Even though feedstock prices continue to ease, we believe the bigger threat to earnings is from lower offtake from the auto sector. We remain confident of the company’s ability to sustain margins in the 19-20% band and maintain our ‘BUY’ recommendation, but have revised downwards our price target to Rs 50 to reflect the lower earnings," says PINC's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Embattled Citigroup mulling sale, merger

As investors flee and stock drops under $5, board eyes all options; Morgan, Goldman seen as potential suitors

David Enrich / The Wall Street Journal

New York: Executives at Citigroup Inc., faced with a plunging stock price, began weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright, according to people familiar with the matter.
The internal discussions are at a preliminary stage and don’t signal that Citigroup’s board and management are backing down from their insistence that the New York company has ample capital, funding and strategic direction, these people said.
But with the stock down another 26% on Thursday, its worst one-day percentage decline ever, Citigroup officials have decided they need to reckon with a range of scenarios that were unthinkable only weeks ago.
In early trading on Friday in New York, Citi shares were trading at $4.56 (Rs228).
Citigroup’s board of directors was scheduled to have a formal meeting on Friday in the US to discuss the options, according to people familiar with the situation.
The directors have also been talking by phone about what could be done to reverse the stock’s slide. Top executives were locked in meetings on Thursday to hash out a stabilization strategy.
Meanwhile, chief executive Vikram Pandit had scheduled a conference call for 8am on Friday to discuss the situation with senior managers. A Citigroup spokeswoman said in a statement on Thursday evening: “Citi has a very strong capital and liquidity position” and is “focused on executing our strategy”, which includes cutting expenses and selling assets. “We believe the benefits will be seen over time.”
With roots stretching back to 1812 and more than 200 million customer accounts in 106 countries, Citigroup is an icon of global capitalism. It is getting battered by the same financial storm that has already remade the face of Wall Street, forcing the sale of Bear Stearns Companies Inc. and Merrill Lynch and Co. earlier this year, and triggering the bankruptcy filing of Lehman Brothers Holdings Inc.

Pandit and other Citigroup executives have told colleagues they are frustrated and befuddled by this week’s 50% stock decline. Investors have dumped bank stocks en masse on fears that economic woes will batter financial companies worse than previously expected.

Weighing down the shares has been the US treasury department’s decision last week not to buy troubled assets from banks. Citigroup’s balance sheet includes battered securities and loans that many investors hoped could be offloaded to the government.
JPMorgan Chase and Co. shares slid 18% on Thursday, while Bank of America Corp. fell 14%. Citigroup fell $1.69 to $4.71 in New York Stock Exchange composite trading on Thursday. In early trading on Friday, JPMorgan was trading at $21.82, while Bank of America shares were at $11.28.

Source: Livemint

India may deploy more warships to fight pirates - reports

NEW DELHI (Reuters) - The Indian navy may beef up its security presence significantly in the Gulf of Aden to counter the threat of rampant piracy to shipping companies, local newspapers reported on Friday.

Somali pirates have caused havoc in one of the world's busiest shipping lanes this year, hijacking dozens of ships including a Saudi Arabian supertanker loaded with $100 million worth of oil, the biggest hijacking in history.

The Indian navy plans to "significantly augment" its presence off the Horn of Africa, and a proposal by the Ministry of Shipping to deploy up to four warships is under "active consideration", a senior naval officer told the Times of India.

A navy spokesman said ships would be sent to maintain a presence in the region and replace the INS Tabar already deployed there, but added "we cannot share any details on a bigger plan".

India deployed the Tabar, a naval warship, in October to escort Indian ships after the country's shipping firms said they were losing hundreds of thousands of dollars a month on cost overruns and delays in meeting deadlines.

India also renewed its call for greater cooperation between foreign navies to tackle the piracy threat, the Times of India reported.

One more Indian warship has been sent to carry out joint patrols with the INS Tabar, and has been granted the right of "hot pursuit" to chase pirate vessels, the Indian Express said, quoting a senior navy officer and unnamed sources.

Piracy off Somalia is forcing shipping companies to avoid the Suez Canal and send cargoes of oil and other goods on a longer and more expensive journey around southern Africa.

Pirate attacks in Somali waters this year have driven up insurance costs for shipping firms and the decision to divert cargo risks pushing up prices for manufactured goods and commodities.


"We are happy that the Indian navy has increased its presence," Shashank Kulkarni, Secretary General of the Indian National Ship Owners Association (INSA) told Reuters.

Indian shipping is especially vulnerable to pirate attacks because a large portion of its vessels are slow-moving tankers, rather than nimbler container ships that can escape more easily and whose higher deck is harder for the pirates to reach, Kulkarni said.

There are fears the Somali pirates are spreading their reach, making it more difficult for warships to patrol such a large area, Kulkarni added.

"This is an exercise we wanted two months ago."

A defence and security analyst told Reuters the deployment of more ships was a "tactical response" but would not address the root cause of trouble in Somalia's anarchic state.

"It needs to have a political, diplomatic solution at the upper end. That appears to be elusive," Uday Bhaskar said.

India has a long-term strategic interest in the Gulf and West Asia, and "should be seen to be providing a collective good," Bhaskar added.

"It is a very modest contribution, but it points in the direction in which India should be going."

Bailout debate simmers; GM pares output, jet fleet

DETROIT/WASHINGTON (Reuters) - Detroit automakers began work on the turnaround plans demanded by Congress in return for a possible $25 billion rescue as General Motors Corp said it will cut production more deeply and drop two of its controversial corporate jets.

Pushed to the brink of failure by a plunge in auto sales, GM said on Friday it would idle five North American plants for more time to cut production and keep inventories.

The top U.S. automaker also said it would return two of its leased corporate jets amid intense criticism this week over GM executives' deluxe arrangements for traveling to Washington to plead for a federal bailout.

Congressional leaders agreed on Thursday to give Detroit automakers until next month to make their case for a rescue but demanded that GM, Chrysler LLC and Ford Motor Co show they have business plans that can keep them out of bankruptcy.

House Speaker Nancy Pelosi said she and Senate Majority Leader Harry Reid, the leaders of the Democratic majority, were sending a letter to the CEOs of the Detroit Three detailing what the high-stakes turnaround plans need to show.

"It will be up to them how they respond," Pelosi told reporters in Washington.

The restructuring plans will have to show how management and labor are making concessions in order to clinch the government rescue portrayed by automakers as the only alternative to bankruptcy and massive job losses.

"Everybody has to participate in ensuring the viability of the auto industry," Pelosi said.

She added: "This isn't to be life support for three months, it's about viability for a long time to come," she said.

Democratic leaders threw down the blunt ultimatum to Detroit after failing to persuade the White House and congressional Republicans to support using some of a $700 billion financial rescue plan for an autos bailout.

Analysts said GM, Ford and Chrysler now have to demonstrate that investors, creditors, management and the United Auto Workers union would share in the sacrifice and cautioned that the window for a bailout was closing fast.

"Can the U.S. automakers provide a convincing plan?" Deutsche Bank analyst Rod Lache asked in a note to clients. "Based on the risks involved, we are not willing to place strong odds on the potential for a bailout before January."

That could put the decision on whether and how to save Detroit with the administration of President-elect Barack Obama, who supports a bailout hinging on industry reform but has managed to steer clear of the bruising political debate.

A spokesman for Obama's transition team said on Friday that the incoming administration was not exploring the possibility of having the government support a prepackaged bankruptcy filing for the automakers, an alternative some analysts have urged as a way for GM and Chrysler to shed excess production capacity, brands, workers and dealers.


A political dilemma for lawmakers is that the cost will be high in terms of lost jobs and benefits under the kind of sweeping restructuring needed to ensure the viability of the automakers, analysts said.

"To make them viable again requires that automakers make decisions that are very unpalatable to a lot of people," said Erich Merkle, a consultant at Crowe Horwath, describing across the board layoffs of hourly and salaried workers.

The path to viability "basically is going to be firing their constituents and cutting back the retiree benefits their constituents rely on," Merkle said.

"The money will come, I'm very confident it will come, but will it come before one of them files for bankruptcy or after?"

Deutsche Bank's Lache, who has a price target of zero on GM stock, said a successful restructuring for the automaker would mean "shrinking to a defendable core" by cutting weaker brands and shuttering factories.

It will also mean lower wages for UAW-represented workers and restructuring GM's balance sheet by forcing creditors to swap out of secured debt at as little as 25 cents on the dollar plus stock warrants, he said.

Barclays analyst Brian Johnson kept his $1 price target on GM shares on Friday and said a federal bailout at this point would have more impact on shares of auto parts suppliers.

"While a bailout would lift a cloud over parts names, we believe GM equity has little value," Johnson said in a note for clients.

Citibank analyst Itay Michaeli said GM would have to race to come up with a new restructuring plan that could include changes to its planned payments into a health care trust negotiated with the UAW and possibly a debt exchange for creditors.

"The burden of proof may not be so simple for GM, in our view," Michaeli said of the requirement that GM show it can be a viable company.


The U.S. auto bailout has been caught up in partisan politics from the start although lawmakers from both sides have been unflinching in their criticism of the industry.

Democrats have generally sought to promote the interests of organized labor and environmental groups, while Republicans have been feeling the heat from constituents concerned about the mounting cost of government bailouts.

Many Democrats in Congress are angry with the auto industry for having fought efforts to increase fuel-efficiency standards for years.

Republicans, meanwhile, have been reeling from the backlash in the November 4 election against the $700 billion bailout that they earlier approved for banks despite complaints it amounted to a blank check for Wall Street.

A lightning rod for controversy during testimony this week by the Detroit CEOs was their use of corporate jets to fly to Washington to plead their case for the bailout.

GM spokesman Tom Wilkinson said GM decided to return two leased corporate jets because of a "really aggressive cutback in travel."

Wilkinson said the decision to return the leased jets was made before this week's hearings. In September, GM returned two other of the seven jets it had been using, he said.

"There is a perception issue," Wilkinson said. "We need to be very sensitive to that going forward."

GM Chief Executive Rick Wagoner and Ford Chief Executive Alan Mulally are required by their companies to fly by private aircraft for security reasons.

The policy for Bob Nardelli, who heads private Chrysler, is not required to be disclosed. Chrysler is owned by private equity firm Cerberus Capital Management LLC.

HDFC, Axis Bank continue to remain expensive: Tandon

Anand Tandon, Director Equities, Brics Securities is of the view that HDFC and Axis Bank are continues to remain expensive.

Tandon told CNBC-TV18, "The frontline banking continues to remain expensive. I think some of the smaller banks are not so but with the exception of ICICI Bank, which obviously is now trading well below any fundamental value but it’s therefore factoring in a lot of potential losses. HDFC and Axis Bank, I think continue to remain expensive. I think especially HDFC more than HDFC Bank; the logic for it to coming down is still quite strong."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

JP Associates may re-test Rs 50: Gujral

Technical Analyst, Ashwani Gujral is of the view that Jaiprakash Associates may re-test Rs 50.

Gujral told CNBC-TV18, "The private banking financials are looking quite weak and Reliance Capital particularly has broken below several key supports. I think the next level here now could be closer to about Rs 350 kind of level. I think it needs to hold up out there, it has broken down. On the upside, you need to get pass Rs 515 to get anywhere close to strength."

He further added, "I think JP Associates is going to retest its lows of about Rs 50. I do not think that stock is showing a lot of strength. Rs 75-80 is the resistance that comes up on the upside now."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

Not much downside in IT stocks: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that IT stocks have been beaten down quite a lot especially in the last two years, so there is not too much more of a downside for IT as compared to the market.

Baliga told CNBC-TV18, "For IT we are surely worried about the environment but I think they have been beaten down quite a lot especially in the last two years; I am not talking about the last nine months but in the last two years they have been underperformers. So we do not see too much more of a downside for IT as compared to the market. So I think IT should outperform in the market although you may see a net negative over the next month-month and half. So I think by December end you should get extremely good valuation as far as IT is concerned."

He further added, "Its time for people to start looking at the next up cycle because it’s no point crying over spilt milk. So one should at this point of time start planning for the next up cycle because this market moves through cycle and we are somewhere possibly close to the bottom of the cycle; it could take a couple of months possibly the next three-four months or more but its time to start preparing for the next up cycle."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

Hold HDFC Bank: R Shah

Rajen Shah of Angel Broking is of the view that one can hold HDFC Bank.

Shah told CNBC-TV18, "Ever since HDFC Bank got listed it has enjoyed premium valuations viz other banks and it has been growing 30% every year that has been its performance over the last 10-12 years. I haven’t seen this stock at such reasonable valuations ever since it has got listed and its quoting at about 15 times the current year earnings and about 2.25 times the book value. So this is a reasonable price for this stock and it doesn’t make sense for exiting the stock at the current levels. We do expect about 40%-50% kind of upside, absolute returns in about 24 months time frame in it, so one should hold on to it."

Source: Moneycontrol

Expect 100-150% upside in Unitech: R Shah

Rajen Shah of Angel Broking is of the view that one can expect 100-150% upside in Unitech.

Shah told CNBC-TV18, "Let us rewind the stock markets and go back to 2000, after every bull market ends the leaders of that bull market turn out to be the worst performers, Infosys on the 11th February 2000 was quoting at about Rs 15,000 levels and after that, when that technology bull market ended in a span of about 18 months the stock corrected about 85% from the top to touch a level of about Rs 2100 on September 11th 2001. But from that day onwards if you see what returns Infosys has given till date its about 300% and Unitech did exceptionally well in the Bull market. But today it has corrected about 90% from the top but it doesn’t mean Unitech will go the Infosys way."

He further added, "This company has corrected substantially, the downward to this stock is absolutely nil and I do expect a substantial upside. Fundamentally, its quoting today at a discount of 60% to its NAV, about four times March 2010 earnings and its only in times of utter pessimism but most dismay and disbelief that you get bargains and I think at this level when there is too much of pessimism for the real estate space it makes sense to get into Unitech at current levels. I expect about 100-150% upside of over the next two years."

Source: Moneycontrol

50% upside possible in Rel Comm: R Shah

Rajen Shah of Angel Broking feels that 50% upside is possible in Reliance Communications.

Shah told CNBC-TV18, "Reliance Communications has come down to very compelling levels at the current levels of Rs 180 to Rs 185. If you see what Docomo paid for 3 crore subscribers of Tata Tele that was about USD 10 billon. So in that context R Com which is having more than 5 crore subscribers could easily get value of about USD 15 billion to USD 16 billion where as today its quoting at a value of less than USD 10 billion, so there is a clear cut 50% upside possible in R Com. It has come down quoting 7 times of current years earnings viz the Sensex which is quoting 8.5 to 9 times, so one needs to keep patience for two years."

Source: Moneycontrol

GMR Infra looks expensive: R Shah

Rajen Shah of Angel Broking is of the opinion that GMR Infrastructure is looking expensive.

Shah told CNBC-TV18, "It’s going to be difficult for GMR to move back to levels of Rs 200 to Rs 210. This stock was always an expensive stock and even if you look at this stock at the current levels of about Rs 54, I think it’s a little expensive and still if it comes down to Rs 40 levels, I may think of getting into it. Almost 40% of GMR’s revenues come from air traffic and it is in a bad shape right now and dropped substantially over the past five months. The scenario is going to be the same for at least 6-7 months, so even if you see the best case scenario it shouldn’t report more than Rs 300 crore of net profits. So EPS would be 27-28 times the current earnings, the growth would be 25% to 27% because post 2010 once gas comes into market GMR’s power business must do well. But it’s a little richly valued stock and if it comes down to about Rs 40 levels then maybe one can buy. But I don’t expect the stock to move beyond Rs 80 or Rs 90 in the next 24 months."

Source: Moneycontrol

Go long on Punj Lloyd at Rs 139: Dutta

Devangshu Dutta, Consulting Editor of Living Media is of the view that one can go long in Punj Lloyd at about Rs 139 and cover the trade at Rs 152-153.

Dutta told CNBC-TV18, "In Punj Lloyd I would be looking for an intraday high of about Rs 154 or so in the next couple of days. I’d say the Rs 140 put, which is probably being hit right now, is reasonably good. So, I’d say that you could go long on the stock at about Rs 139, and cover the trade at Rs 152-153."

Disclosure: Analyst doesn't hold the above stock but has recommended it to the clients.

Source: Moneycontrol

SBI looks good in banking space: Sukhani

Technical Analyst, Sudarshan Sukhani is of the view that SBI looks good in banking space.

Sukhani told CNBC-TV18, "With all the volatility that the bank index is showing or rather I should say inspite of all the volatility – SBI is one of the better charts in the banking sector and in the broader universe. But the key question is what do we do? Do we want to buy SBI now and the answer to that would be – is the market bottoming out? The answer to that is not likely."

Source: Moneycontrol

Buy Lupin Labs: Prabhudas Lilladher

Ranjit Kapadia, Head – Research, PCG, Prabhudas Lilladher, is bullish on Lupin Labs. Here is how views the stock and how Devangshu Dutta, Consulting Editor, Living Media, views Punj Lloyd and private-sector stocks.

Is Lupin a good buy?

Ranjit Kapadia likes Lupin Labs and has advised to investors too look at it at this point. “Lupin has given consistent returns over the last three months and also over a one-year period,” he said. “However, in the last one month, the fall in the stock price was in line with the Sensex. But overall, the returns in the last three months and the last 12 months were far better than the Sensex,” he added.

The company, Kapadia said, has got a strong presence in the domestic market as well as the US and the Japanese market. “The US is its largest market. About 50% of the global pharma market is in the US, and Japan is the second largest market after the US. So, the company has a strong presence in all these three regions. The growth rates are much higher than the industry growth rates,” he said.

Kapadia said the company is doing exceedingly well in the domestic market. “They have grown by about 24% during the last quarter, and in the US market they have grown by about 85%, and in the Japanese market the growth rate was 24%. So, these excellent growth rates have taken the topline growth to 41% during the quarter. There was a margin improvement of 200 basis points from 17.1% to 19.1%, and the bottomline grew by about 53% during the quarter,” he said.

The private-sector stocks view:

Devangshu Dutta said, “I would say that the private-sector banking stocks may be weak but certainly nowhere near as weak as the real estate sector. There we see a clear correlation. Every time the rupee hardens, the banking sector tends to make a little bit of a bounceback.” He added, “Today, it has been an unusual day because the banks have, by and large, held on while the rupee has plunged below 50. But, every four sessions or so the rupee tends to harden a little bit, regain about Re 0.40-0.50 and on that day the banks tend to come back.”

How is Punj Lloyd faring?

“I would be looking for an intraday high of about Rs 154 or so in the next couple of days. I’d say the Rs 140 put, which is probably being hit right now, is reasonably good. So, I’d say that you could go long on the stock at about Rs 139, and cover the trade at Rs 152-153,” he said.

Devangshu Dutta Disclosure:
I personally do not hold this stock but have recommended it to clients.

Ranjit Kapadia Disclosure:
I hold the stock and have recommended it to my clients.

Source: Moneycontrol

Buy GVK Power says Sukhani

Technical Analyst, Sudarshan Sukhani is of the view that one can buy GVK Power & Infrastructure at this level.

Sukhani told CNBC-TV18, "An investor could really go and buy GVK Power. The charts suggests that it is bottoming out and probably even in a bear market which could go much lower the stock might simply stay where it is that’s good news. So it is an investor’s opportunity."

Source: Moneycontrol

India strong enough to grow at 8%: PM

Speaking at the Hindustan Times Leadership Summit, Prime Minister Manmohan Singh said that the global economy is going through choppy waters. India will emerge stronger from this crisis, he added. According to Singh, there is a need for a global safety net against delinquencies of a few. Global institutions must be made more inclusive and representative, he added. The Prime Minister feels that a pragmatic approach to policy can help India deal with challenges. “At G20, I urged leaders to recognise interdependencies of economies,” he said.

The PM feels that India has the capacity to sustain 8% growth rate despite the global turmoil. The use of fiscal and monetary policy ensured minimum impact of crisis, he added. No fiscal and monetary tool would be spared against the crisis, he said. Singh hopes that the structure of global financial institutions will be scrutinised. He is conscious that SMEs and the unorganised sector needs special attention. He is committed to ensuring that the industry sails through the crisis.

The new interdependency of nations - no nation is an island into itself. That is why at the recent G-20 summit last week, I urged world leaders to recognize these interdependencies and our stake in our collective future. We need a global safety net so that the poor of the world do not pay a price for the profligacy of the rich and the delinquency of a few. Global problems require global solutions and this is the most important lesson of the past century for the present. But global institutions of governance must be made more inclusive and more representative. The voice of the developing world must be heard by the high councils of the global decision making.

The message of the economic and social crisis now gripping the world and also that extremist ideologies; political or economic have harmful consequences. The idea of India based on the rejection of extreme respect for diversity and pluralism and the expectance of the middle path, offers new pathways to progress for humanity in distress. When nations have tilted to the extremes, they have either hurt themselves or hauled or harmed the world at large. To regain balance they have always had to return to the middle path of social and economic progress. I do believe that such a pragmatic approach to policy can help us deal with the challenges that our world faces today.

My call for moderation is not a rejection of boundless ambition. In some areas of human conduct such an ambition is a necessary part of the progress we seek. Last week the Indian tricolour landed on the moon. I salute with pride our space scientist and engineers.

The Indian industry must have the confidence that it has a Government which knows its mind, which knows how to tackle this crisis as we have tackled the crisis of 1991 before, which was much more severe. We have the will and the resources and the wisdom to deal and grapple with this crisis.

The message I do wish to convey to the Indian industry is a message of hope and self confidence. Government and industry will work together to ensure that India’s development potential is fully realized. No instrument of public policy will be spared, whether it is fiscal policy, monetary policy, exchange rate policy, public investment policy all will be deployed to ensure a environment conducive to the growth of enterprise and encouragement of the spirit of adventure and enterprise.

Source: Moneycontrol

Spread investments over next 6 months: Vibhav Kapoor

Vibhav Kapoor of IL&FS sees a lot of pain for markets going forward. However, he adds most of the bad news has already been priced in by the markets and that the markets won’t test the October lows again. “We have been maintaining for some time that the 2,250 mark we saw on the Nifty in October is at least at intermediate low for the market and could even be a bear market low,” he said, adding: “This does not mean that we are going to go in for a big bull market immediately.”

“While the overall scenario is very negative in terms of news, we think the market has priced that in largely and therefore we are not as negative on the market as we were a few months ago."

According to him, the Nifty is now going to trade rangebound between 2,250 and 2,900 or 3,000. "This range could probably continue for a few months or may be even a bit longer than that."

Investors, he said, should not buy everything at present, but stagger ones' investments over the next six-months.

On the other hand, Sudarshan Sukhani of Technical Trends said it is fair to expect that the Nifty will go down to 2,200 and test the October lows. "Given the downside momentum that we are experiencing currently, the test may not even succeed, which means mentally one should all be ready to expect something below 2,200," Sukhani said.

Here is a verbatim transcript of CNBC-TV18’s exclusive interview with Vibhav Kapoor and Sudarshan Sukhani. Also watch the accompanying video.

Q: The market was prime for a bit of a bounce and it has got it. Where do you see the next days going though?

Kapoor: We have been maintaining for some time that the 2,250 mark we saw on the Nifty in October is at least at intermediate low for the market and could even be a bear market low and we continued to maintain that view. Of course, this does not mean that we are going to go in for a big bull market immediately but we think that a lot of the negatives, which are there in the fundamentals, in the [Indian] economy, in the global economy, have been mostly priced in into the market in this last big fall that we had.

There is going to be a lot of pain going forward — one will keep on hearing negative news fundamentally on the economic side, and probably a couple of quarters of bad results on the corporate side. But as I said, they have mostly been priced in. So essentially, the market is now going to be rangebound maybe between 2,250 — which we saw earlier — and probably something like 2,900 or 3,000 odd on the higher side. This range could probably continue for a fairly long time to come, which could be a few months or maybe even a bit longer than that. So while the overall scenario is very negative in terms of news, we think the market has priced that in largely and therefore we are not as negative on the market as we were a few months ago.

Q: It has been debilitating for global markets and now there are fears of what happens with some other financials like Citi for example. Will we remain very in tune with what happens with the global market picture in the near term?

Kapoor: I guess so because it has been generally proved now that there is no decoupling, which happens in the world, whether it is India or China. So we are going to be in tune with the global markets. But globally too, a lot of the bad news has been sort of priced in into the markets. So while one might see another 10% fall in the US markets and maybe in the other global markets as well that could make us retest the bottom of 2,250 going forward. So, one could see these panics happening sometime. But I don’t think that even if you look at the fundamentals, if you look at the other side where there are other positives happening — with interest rates, inflation and oil prices coming down — when one takes a look at all of that, I don’t think we are really going to much below 2,250 and at that level the market seems to look attractive. Again, it is not anybody’s case that one should be buying everything now and we should be looking to buy but looking to buy only on panic days and not on a day like today. That also spread out your investments over the next six-months.

Q: We got a bounceback as the market was expecting. But do you think we can do a little bit more with it?

Sukhani: Yes, why not. We had seven down days. That was also remarkable because in this bear market, we have had rallies after three and four days. This time, we had seven continuous days when the market simply fell.

So, the market apart from international cues was ready for a relief rally. And luckily we got one today. This can easily continue, it can continue on Monday. We can reach 2,900 on Tuesday. That is the level at which a significant resistance occurs.

So, that is a good 200 points and it is tradable, and traders can make money if the markets help.

Q: The medium-term trend however still remains intact, right – that October low that we will get to?

Sukhani: Yes, the medium-term trend is down. The primary trend, which is the long-term trend, is down. It is only the very short-term trend that appears to have changed today.

So, if the intermediate trend is down, there is no reason to assume that the markets will stop falling. Now the timing is different. The markets will fall when they want to. But it is fair to expect that we will go down to 2,200 and test the October lows.

Given the downside momentum that we are experiencing currently, the test may not even succeed, which means we should all be ready mentally to expect something below 2,200.

Q: What do you do with this whole real estate pack?

Kapoor: We should be completely avoiding this sector for the time being. This is one sector where probably a lot more negatives have to come in, in terms of fall in prices, delay in construction of projects. Most of the real estate companies are heavily overleveraged. So, they are going to have problems. Their balance sheets are not so strong in that sense.

So this is one sector that one should avoid not just for the time being but for quite some time to come. Even if one wants to buy into the market gradually, this would probably be one of the last sectors I would recommend.

Q: In the next few days, do you think it is likely we might get some fiscal impetus? There has been a lot of talk about setting up a special window or a fund for infrastructure projects?

Kapoor: I am reasonably sure that we will get a monetary policy change sooner or later, which is a reasonable cut in interest rates, and maybe some other measures too.

As far as fiscal is concerned, something like a special window for infrastructure projects is all fine. But the issue there is that these projects take a long time to get executed. There are so many hurdles and clearances that have to be got.

So, it is not only a question of availability of finance. The impact of such measures takes quite a long time to come. So even if something like that is done, I don’t think it will have any immediate impact.

Q: Is there a tradable bounce in some of those stocks though — Reliance Infra, GVK and IVRCL?

Sukhani: In most of these, there is a tradable bounce in spite of the 5-7% gains we have seen. The stocks had fallen so much that the relief rally could easily take them higher. So the entire infrastructure pack, the construction pack has some potential. We are talking about the very short-term swing trade, which is going to last till the middle of next week. So this is not to say that these stocks have suddenly become long-term investment-buying opportunities. That’s not the case. But yes, for traders, there is something probably here.

Q: One word on Reliance, which held out today?

Sukhani: Reliance and Nifty are going together. Beyond that Reliance is likely to under-perform. One of the problems with Reliance is that, unlike the Nifty — the Nifty has strong support at 1,800-2,000, so it is not very far — Reliance has no support whether it falls to Rs 900-800 or Rs 1,000. The next support comes somewhere around Rs 400-500. So for me, Reliance becomes a very tricky stock to buy and hold. One can trade in it but one might as well trade in the Nifty. That’s probably a better opportunity.

Source: Moneycontrol

Housing prices likely to fall in coming days: Developers

New Delhi, Nov 21 (PTI) After galloping wildly for over three years, real estate prices today showed real signs of cooling with leading players, like DLF and Unitech, signalling lower apartment costs.
Realty industry body National Real Estate Development Council (NAREDCO) today asked its members to cut rates on housing projects by up to 15 per cent to revive sales.

Appreciating the initiative, Unitech spokesperson told PTI, "We welcome the move by NAREDCO. We will consider to cut the prices accordingly." DLF Group Executive Director Rajeev Talwar said: "Everyone will fall in market-determined price so that buyers will buy at the best prices and will come back again." All NAREDCO members would follow the advice, he said.

Other realty firms, including Ansal API, Omaxe and Assotech, have already agreed to cut prices, while Bangalore-based Sobha Developers has promised to evaluate slashing rates, NAREDCO President Rohtas Goel said.

The Council has asked members to cut sales price by 1-5 per cent for existing projects, 5-10 per cent on future projects and 10-15 per cent on affordable housing ranging between Rs 3-20 lakh. These reductions would be in the form of discounts to the customers, who pay their instalments on time.

NAREDCO requested the members to cut down their margins, reduce advertisement budgets and slash brokerage fees so that discounts could be offered to the consumers.

Earlier this week, Finance Minister P Chidambaram had asked the Indian industry to cut prices to revive sales and reduce inventories.

"We respect the concerns of the Finance Minister and we are ready for price cuts. On existing projects the prices have already fallen by 20-40 per cent across the country," said Goel, who is also the Chairman and Managing Director of Omaxe. PTI

Fed's Lacker: Reasonable to expect rebound in 2009

BETHESDA, Maryland (Reuters) - Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday it is reasonable to expect the economy to reverse a downward track some time in 2009, and warned of inflation risks in any rebound.

"Many analysts expect the U.S. economy to regain positive momentum sometime in 2009," he said in a speech to the Tech Council of Maryland.

"That strikes me as a reasonable expectation," he said.

He said the downturn in the economy poses challenges for monetary policy in the period ahead, including a possible rise in inflation expectations.

"It's essential that we not let inflation drift from view," Lacker said.

"It may seem premature to be worrying about how inflation behaves after the recession is over, but we need to be sure our policy remains consistent with a strategy that does not allow inflation to ratchet up over the business cycle," he said.

Lacker, one of the Fed's most vocal inflation hawks, will be among the voters next year on the central bank's interest-rate setting panel.

Financial markets are in one of the most serious episodes of turmoil in decades, and major economies around the world have tipped, or are tipping into recession. U.S. stocks fell sharply on Thursday, taking the benchmark S&P 500 down more than 52 percent below its October 2007 record high.

The Fed has cut rates by 4.25 percentage points to 1 percent since September 2007 to put a floor under the faltering economy, and is expected to chop rates by another half-percentage point at its December 15-16 meeting.

Lacker argued the economy could be seen as ready to rebound next year.

Monetary policy is "quite stimulative," he said. Also, the major shocks that have dampened economic activity this year "have subsided already or are in the process of doing so," he added.

Households to cut Christmas gifts spending: survey

NEW YORK (Reuters) - U.S. households could cut spending on Christmas gifts by about 11.3 percent this year, the Conference Board said on Friday, as the worst economic crisis since the Great Depression erodes consumer wealth.

The Conference Board's Christmas gift spending intentions survey covering 5,000 households found that consumers were in a less-generous mood, planning to spend an average of $418 on presents, compared with last year's estimate of $471. The survey was conducted in November.

"This is shaping up to be one of the most challenging holiday seasons in years and it's going to take more than the usual discounts and incentives from retailers to get consumers to spend more freely," said Lynn Franco, director of the Conference Board Consumer research center.

The U.S. housing market's collapse has contaminated both the domestic and overseas economies, triggering the worst financial crisis since the Great Depression of the 1930s.

The crisis has manifested itself in tight credit conditions globally that have constrained both corporations and individuals' ability to obtain loans, leading to massive job losses.

The U.S. unemployment rate surged to 6.5 percent in October, the highest in 14 years. A Reuters/University of Michigan Surveys of Consumers released on Friday found that consumers expect the jobless rate to top 8.5 percent by the end of 2009.

Democrats demand Big 3 offer survival plan

WASHINGTON (Reuters) - Democratic congressional leaders, seeking to salvage a bailout of the Big Three automakers, demanded executives provide a business survival plan in exchange for their support of up to $25 billion in loans.

The ultimatum came on Thursday after the Democratic leaders failed to persuade the White House and congressional Republicans to use part of a $700 billion financial rescue fund to prop up the auto industry.

Hanging in the balance is the future of General Motors, Ford Motor and Chrysler LLC, whose losses have mounted during a severe economic downturn that has prompted Americans to largely stop buying cars.

Shares of GM and Ford rebounded from multi-decade lows as the developments in Washington kept bailout hopes alive.

While many lawmakers are anxious to see the companies survive, Republicans have been more wary of whether the money would really help, and Democrats have been more inclined to be generous to the huge employers of unionized labor.

Democratic leaders acknowledged on Thursday a growing public resentment over government bailouts of U.S. business in slowing the automakers' demands, saying they will take a look after the auto industry provides a roadmap to its survival.

House of Representatives Speaker Nancy Pelosi, a California Democrat, and Senate Majority Leader Harry Reid, a Nevada Democrat, told a news conference that the automakers must develop a bailout proposal by December 2 and it would be considered during the week of December 8.

"Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future... we cannot show them the money," Pelosi said.

Said Reid: "We can only help if they (the automakers) are willing to help themselves."

Both General Motors and Ford pledged to cooperate.

Amid warnings that General Motors might be facing bankruptcy by the end of the year, a bipartisan group of U.S. senators sketched out a possible compromise.

The White House said President George W. Bush could support the proposal spearheaded by Sen. Carl Levin, a Michigan Democrat, and Sen. Christopher Bond, a Missouri Republican, to allow automakers and their suppliers to use $25 billion in Energy Department loans for greener cars to address their current crisis.

The senators attached a heavy Washington hand. They proposed letting the government veto any auto investments or asset sales over $25 million.

Keeping a low profile was President-elect Barack Obama, who earlier in the week said U.S. automakers needed a government rescue but the help should be conditioned on changes in the industry.


The Big Three's executives testified on Capitol Hill this week about their dire economic situation, but undercut their argument by flying to Washington aboard corporate jets instead of taking cheaper transportation.

"I know it wasn't planned, but these guys flying in their big corporate jets doesn't send a good message to people in Searchlight, Nevada, or Las Vegas, or Reno, or any other place in this country," Reid said.

The automakers' woes have added to a chaotic U.S. economic picture, with fears that a failure to get a bailout would lead to thousands more layoffs and deepen what many economists believe are recession conditions.

In Detroit, United Auto Workers President Ron Gettelfinger said lawmakers need to take immediate action on a $25 billion loan bill to support the U.S. automakers or one or more could fail by the end of the year.

"Inaction is simply not an option," he said.

Transplanted automakers are also feeling the pinch. Honda Motor Co Ltd said on Thursday it would cut another 18,000 units from its planned U.S. production in response to the industry downturn.

A bankruptcy of one or all of the Big Three could shake vast sections of the U.S. economy, an argument Democrats have emphasized. Some Republicans have argued a bankruptcy could allow the companies to make structural changes needed to assure their long-term survival.

Many analysts believe the Big Three need massive restructuring to reduce their costs and to produce cars that Americans will buy, after years of making gas-guzzling sport utility vehicles that have fallen out of favor after people got a taste of $4-a-gallon gasoline over the summer.

The White House and its Republican allies on Capitol Hill have drawn the line against extending part of the $700 billion financial industry bailout to the Big Three saying that could prompt other sagging industries to seek a government handout.

Instead, they have called on Democrats to back amending the $25 billion earmarked in September for meeting new fuel-efficiency standards as the way to help the Big Three.

Clint Currie, a transportation analyst at the Stanford Group in Washington, said he believes Congress will pass a bailout with harsh terms for the industry in January.

Senior management might have to leave and there might be major mandates for restructuring attached, he said.

"I think there's a fairly high likelihood that they'll pass an auto bailout in January, and from all indications it's not going to be something they're going to like," he said. "They're going to have to take it or leave it at that point."

Although share gains were tempered after Reid and Pelosi's criticism, GM closed up 3.2 percent at $2.88 and Ford ended 10.3 percent higher at $1.39, both on the New York Stock Exchange. Chrysler is owned by Cerberus Capital Management.

GM to return two leased jets amid criticism

DETROIT (Reuters) - General Motors Corp will return two of its leased corporate jets amid intense criticism in Washington this week on the luxury travel arrangements of its chief executive even as the company pleads for federal aid.

CEO Rick Wagoner was in the capital to testify on the company's dire financial situation but his testimony was overshadowed by irate lawmakers who blasted him for flying on a private jet to ask for public funds and failing to make personal sacrifices in exchange for federal assistance.

Chief executives from Ford Motor Co, and Chrysler LLC, who were also there to plead for $25 billion in federal aid, came under fire too for flying to Washington in private jets.

GM spokesman Tom Wilkinson said on Friday GM decided to return the aircraft because of a "really aggressive cutback in travel."

The company, which is in a cost-cutting mode, is scrutinizing every trip, he said, but declined to disclose the name of the company it leases the airplanes from.

Wilkinson said the decision to return the leased corporate jets was made before this week's hearings and that the company in September returned two other of the seven jets it had at the beginning of the year.

"There is a perception issue," Wilkinson said of Wagoner's travel to Washington on a private jet. "We need to be very sensitive to that going forward."

He, however, said the company has not decided on what mode of transportation Wagoner would take if had to travel to Washington again.

Wagoner and Ford CEO Alan Mulally are required by their companies to fly by private aircraft for security reasons, according to company documents filed with the U.S. Securities and Exchange Commission.

The policy for Chrysler CEO Robert Nardelli is not required to be disclosed because the company is not publicly traded.

Skeptical lawmakers took to task the three CEOs for their luxurious travel arrangements at congressional committee hearings.

"Couldn't you have downgraded to first class or something, or jet-pooled or something to get here?" Rep. Gary Ackerman, a New York Democrat, asked the executives at a hearing held by the U.S. House Financial Services Committee.

Even Democrats who said they were sympathetic to the automakers' plight expressed frustration that the executives used private jets while professing ruthless cost-cutting measures.

A Chrysler spokesman said the automaker also leases or charters jets. He, however, declined to comment on whether the company was rethinking the use of private jets for executive travel, saying it was a "private matter."

Ford did not have an immediate comment on its corporate jet policy.

According to Ford's proxy, CEO Mulally's compensation included $752,203 in 2007 for personal use of company aircraft.

About two years ago, the head of Ford's North American operations, Mark Fields, gave up use of a corporate jet for personal travel to his home in Florida after the arrangement came under criticism at a time when the automaker was losing billions and slashing jobs.

He now flies first class on commercial planes.

Bargain hunters lift stocks, but Citi sinks

NEW YORK (Reuters) - Stocks rose in choppy trade on Friday as investors snapped up cut-price shares in beaten down sectors, including commodities and energy, a day after Wall Street slid to 11-year lows.

Even so, fresh worry about the future of embattled No. 2 U.S. bank Citigroup limited a broad market advance as the stock dragged on financials and pushed Citigroup to around 15-year lows.

Citigroup shares tumbled about 16 percent to $3.94 following news reports that the company is considering selling pieces of its business or the entire company outright.

Shares of energy companies, helped cushion both the Dow and the S&P 500, with Exxon Mobil up more than 3 percent.

The S&P energy index was up 3.2 percent, with all but three of the index's 41 components higher.

"The market is very oversold and bouncing off the recent multi-year lows," said Matt McCall, president of Penn Financial Group in Ridgewood, New Jersey. "With regards to Citigroup, unless something changes dramatically, they're going to end up being broken up or somebody flat out taking them over."

The Dow Jones industrial average gained 35.84 points, or 0.47 percent, to 7,588.13. The Standard & Poor's 500 Index rose 1.78 points, or 0.24 percent, to 754.22. The Nasdaq Composite Index edged up 3.76 points, or 0.29 percent, to 1,319.88.

On Nasdaq, shares of Microsoft , which is also a Dow component, jumped nearly 7 percent to $18.70, making the stock a top boost after a Oppenheimer & Co, a brokerage, raised its rating on the software maker.

Besides Citigroup, shares of JPMorgan declined 11.4 percent to $20.77 and Bank of America shed 7.5 percent to $10.40.

Goldman Sachs, meanwhile, cut its outlook on the U.S. economy, forecasting it would contract by 5 percent at an annual rate in the current quarter and unemployment rate would soar to 9 percent by late 2009 from 6.5 percent in October.

The failure of U.S. automakers, including General Motors Corp, to secure an immediate government bailout to avert possible bankruptcy linger, also contributed a negative tone.

Shares of Wal-Mart Stores Inc rose 1.7 percent to $51.54 after the world's largest retailer said Lee Scott was retiring as chief executive and it named Mike Duke, who heads Wal-Mart's international operations, as his successor.

Citigroup shares drop as CEO plans to keep Smith Barney

NEW YORK (Reuters) - Citigroup Inc shares tumbled for a fifth straight day, as Chief Executive Vikram Pandit tried to downplay speculation the banking giant might sell major businesses to restore its health and investor confidence.

Pandit told employees on Friday that Citigroup, the second-largest U.S. bank by assets, does not want to change its business model and plans to keep its Smith Barney brokerage, according to two people who heard him.

He also said Citigroup had a solid capital position, and that employees should not focus on the bank's falling share price because that is not what regulators and credit rating agencies worry about, the sources said.

In late-morning trading, the shares were down 85 cents, or 18 percent, at $3.86, after earlier tumbling as much as 24 percent to $3.58. They closed at $9.52 a week ago.

The cost to protect Citigroup debt against default rose, suggesting that fixed-income investors see increased risk.

"It's fear and panic at this point," said Gerard Cassidy, a banking analyst at RBC Capital Markets in Portland, Maine. "Investors have seen similar movies this year, and the endings are very unpleasant."

Citigroup is looking at options including a sale of parts of the company, or a merger with another company, a person familiar with the matter said on Thursday.

Concerns are rising that the drumbeat of negative news about Citigroup could prompt customers or trading partners to flee.

"We worry if the lack of investor confidence leads to (a) lack of customer confidence," wrote Barclays Capital analyst Jason Goldberg. "We believe the market may be implying some sort of regulatory intervention."

Within the last three months, major U.S. lenders Wachovia Corp and Washington Mutual Inc suffered rapid outflows of deposits, as losses mounted on mortgages and other debt. Wachovia later agreed to be bought by Wells Fargo & Co, while Washington Mutual failed and its assets were bought by JPMorgan Chase & Co.

Earlier this week, Pandit set plans to shed 52,000 of Citigroup's 352,000 jobs by early 2009, and to move tens of billions of dollars in troubled securities onto its balance sheet.

The bank is also pushing the U.S. Securities and Exchange Commission to reinstitute a temporary ban on short sales of financial stocks, a person familiar with the matter said.

The cost to protect its debt was $470,000 annually to protect $10 million of debt against default for five years, up from $395,000 annually on Thursday, according to Phoenix Partners Group. Banks in extreme distress that were eventually taken over by regulators had much higher credit default protection levels, signaling that credit markets foresee either a dilutive capital raise for Citigroup, or government intervention that does not hurt bondholders.

On Thursday, Saudi Prince Alwaleed bin Talal said he planned to increase his stake in Citigroup to 5 percent from less than 4 percent. The bank's largest individual investor called Citigroup's shares "dramatically undervalued."

Citigroup's market value was $25.7 billion as of Thursday's close, down $48.7 billion this month, and down about a quarter trillion dollars since late 2006.

Thursday's market value was barely above the $25 billion that Citigroup received as part of the government's $700 billion financial industry rescue package. Citigroup said it has also raised another $50 billion of capital from other investors since the middle of 2007.

Associated Press to cut 10 pct jobs in '09 - sources

NEW YORK (Reuters) - The Associated Press plans to cut up to 10 percent of its workforce in 2009, according to sources at the news service, as it copes with tough financial times and ailing member newspapers.

The AP has one of the world's largest news-gathering teams, employing about 3,000 journalists, and a total of about 4,100 people worldwide. The cuts could amount to about 400 employees.

AP Chief Executive Tom Curley delivered the news as part of a "town hall" meeting with employees.

"All areas and ways of doing business are being reviewed," said an AP statement provided to Reuters. "The AP, which recently instituted a strategic hiring freeze, may need to reduce staff over the next year. If so, it hopes to achieve much of the reduction through attrition."

The job cuts come as the AP restructures its operations in the United States in a bid to provide what it said would be deeper, more relevant coverage for its member newspapers.

It is unclear how the cuts would affect the AP's news flow. Many U.S. residents cannot read a day's helping of news in print or on the Internet without encountering an AP story. The group has 240 bureaus worldwide, numerous local U.S. bureaus and 1,500 U.S. daily paper members.

The AP, which started 162 years ago as a newsgathering cooperative for U.S. papers, earlier this year revised its rate structure for member papers to help lower the fees that they pay as advertising revenue declines imperil publishers.

This comes after publishers objected to the terms of a previous rate structure plan the AP had planned to introduce.

One big publisher, Tribune Co, gave notice that it might drop the AP stories over the next two years as a result.

Some papers, like The Star-Ledger in Newark, New Jersey, have started exploring running editions without AP stories, which often fills many pages of papers that have been slashing staff, leaving few people and few ads to fill the space.

The Star-Ledger and many other papers, as well as big publishers from USA Today's Gannett Co Inc to McClatchy Co and the New York Times Co have collectively cut thousands of jobs this year. Investors in turn have abandoned these companies as stock market prospects as their chances for recovery fail to materialize.

In addition to wires such as Bloomberg, Dow Jones Newswires and Agence France-Presse, the AP competes with Reuters News, a division of Thomson Reuters Corp.

Bank of NY Mellon to cut 1,800 jobs

NEW YORK (Reuters) - Bank of New York Mellon Corp on Thursday said it plans to cut 1,800 jobs as falling equity markets reduce the assets it oversees, cutting into potential profit.

The reductions affect about 4 percent of the New York-based company's 43,000-person workforce, with the bulk beginning in January and continuing through 2009, spokesman Ron Gruendl said. Some cuts will come through attrition, the bank said.

Bank of New York Mellon declined to say which businesses or geographic regions will be affected.

Thursday's cuts are not related to Bank of New York Co's $18.3 billion purchase in July 2007 of Pittsburgh-based Mellon Financial Corp, which created Bank of New York Mellon. The merger was expected to result in 3,900 job reductions.

"It has become clear that we need to take additional steps beyond our merger synergies to reduce expenses, given the current weakness in the global economy," Chief Executive Robert Kelly said in a statement.

Bank of New York Mellon is the world's largest custodian of assets for institutional investors and one of its biggest asset managers and even before this quarter's stock market selloffs had seen assets decline.

Assets under custody fell to $22.4 trillion as of Sept 30 from $23 trillion three months earlier, while assets under management fell to $1.07 trillion from $1.11 trillion.

Third-quarter profit fell 53 percent from a year earlier, largely because of a charge to bail out money market funds.

Bank of New York Mellon joins other asset managers to announce job cuts over the last few weeks, including: Fidelity Investments, Janus Capital Group Inc, Legg Mason Inc, MFS Investment Management and Putnam Investments. MFS on Thursday announced 90 job cuts, or 5 percent of its workforce.

Last month, the bank said it would receive a $3 billion capital injection from the U.S. Treasury Department. It was one of the nine original banks to receive funds from the government's $700 billion bank rescue package.

Shares of Bank of New York Mellon closed Thursday down $1.03 at $24.36 on the New York Stock Exchange. They have fallen 50 percent this year.

GLOBAL MARKETS - Stocks rebound on rate cut hopes; bonds up

LONDON (Reuters) - European and Asian shares managed to rise and oil rose towards $50 on Friday as expectations of further interest rate cuts helped to cushion deepening gloom about the financial and auto sectors as well as the broader economy.

On Wall Street, the benchmark S&P 500 index fell to its lowest level since 1997 as signs of distress in the economy mounted, led by troubles at Citigroup and U.S. automakers.

However, Citigroup, which fell more than 26 percent on Thursday, rose 6 percent in Frankfurt trading. U.S. lawmakers kept alive prospects for a $25 billion bailout plan for carmakers, although no agreement was reached on Thursday.

Furthermore, hopes that the world's central banks would cut interest rates further -- with talk that China might lower borrowing costs later on Friday -- helped world stocks off an earlier 5-1/2 year low.

"Rumours are only rumours, but investors are always interested in talk that there will be more official steps that could help the market rebound further," said Wu Nan, analyst at Xiangcai Securities.

MSCI world equity index was up 0.8 percent after hitting its lowest level since April 2003. The FTSEurofirst 300 index also rose 0.8 percent. Emerging stocks gained 1.8 percent.

U.S. crude oil increased 0.3 percent to $49.55 a barrel, having hit a 3-1/2 year low below $49 earlier.

Investors sought safer government securities even though stocks rebounded. The December bund future rose 43 ticks while the two-year U.S. Treasury yield touched a fresh record low of 0.9586 percent.

The 10-year Treasury note dropped a full point in price to yield 3.112 percent , after hitting 2.990 percent on Thursday -- its lowest level since the 1950s. The 10-year yield was trading at above 4 percent only in June.

"The main risk is the recession and that we are probably ahead of the worst year over the last century in terms of economic growth and that this will take its toll on many industries," said Kornelius Purps, fixed income strategist at UniCredit.

"We are probably only at the beginning of this poor performance in terms of economic growth and other factors will follow. This is quite worrisome and will keep a bid in the bond market."

The yen fell 1.5 percent to 95.11 per dollar after hitting a three-week high beyond 94 earlier. The dollar fell 0.5 percent against a basket of major currencies.


Talk of Chinese interest rate cuts complemented a rumour that authorities might soon announce the creation of a 300 billion yuan fund to support the stock market.

Euro zone interest rates are also expected to fall next month, and possibly earlier. A PMI survey on Friday showed that output of euro zone services and manufacturing business sank much further and faster than expected in November to record lows.

JP Morgan also said that bigger-than-expected declines in Canadian inflation also allow the central bank to cut interest rates more aggressively in December by as much as half a percentage point.

The Bank of Japan, however, kept its key policy rate unchanged at 0.30 percent on Friday. Governor Masaaki Shirakawa said more rate cuts could disrupt markets as they might cause various problems in ensuring smooth fund supply in money markets.

Textile cos may cut 500,000 more jobs - secy

NEW DELHI (Reuters) - The textile sector could shed 500,000 jobs in the next five months, Trade Secretary G.K. Pillai said on Friday, quoting textile ministry estimates.

BSE Sensex snaps 7-day slide, rises 5.5 pct

MUMBAI (Reuters) – The BSE Sensex snapped a seven-day slide and climbed 5.5 percent on Friday, after large domestic funds bought in late trade triggering short covering ahead of the weekend.

Expectations the Reserve Bank will cut interest rates to support slowing growth underpinned the market that had tumbled a fifth over the previous seven days.

Traders said the fund buying came in during the last 90 minutes after the main index slipped into negative. Index heavyweight Reliance Industries Ltd, financials and outsourcers led the bounce.

"People have been expecting a rate cut in the next couple of days and that is visible in the gains made by SBI and HDFC. If it doesn't come, there may be renewed selling in banking stocks," said Neeraj Dewan, director at Quantum Securities.

State Bank of India, the country's largest lender, rose 8.3 percent to 1,183.15 rupees, while rival ICICI Bank gained 4.7 percent to 335.55 rupees. Mortgage lender Housing Development Finance Corp rose 8.5 percent to 1,399.30 rupees.

The bank sector index rose 4.6 percent.

The Reserve Bank has cut its main lending rate by 150 basis points to 7.5 percent and banks' cash reserve requirement by 350 basis points to 5.5 percent in the past two months and the authorities have said more steps were on the anvil.

The 30-share BSE index rose 5.49 percent, or 464.20 points, to 8,915.21, its first gain in eight sessions.

It lost 5 percent over the week, falling for a second week in a row, and is down 56 percent this year.

All but three of the index components were higher, but in the broader market losers edged out gainers 1,299 to 1,185. Volume was a moderate 276 million shares after being light in the past

two days.

The 50-share NSE index gained 5.5 percent to 2,693.45.

The outlook for the market remains downbeat with the global economic gloom and a slowing domestic growth hastening foreign fund withdrawals from emerging markets such as India, traders


Foreigners have pulled out a net $13.45 billion from Indian shares this year, with the outflow so far in November at $624.9 million.

Export-led software firms gained on hopes a sliding rupee would help their earnings. The rupee hit a record low of 50.60 per dollar on Thursday, losing more than a fifth this year.

Tata Consultancy Services rose 7.9 percent to 506.55 rupees, Infosys Technologies gained 5.1 percent to 1,184.75 and Wipro was up 4.6 percent to 229.80 rupees.

European and Asian shares rebounded from lows on hopes central banks from across the world would cut interest rates further to cushion the deepening economic gloom. [ID:nLL345383]

Energy giant Reliance Industries, which has the heaviest weight in the BSE index, rose 6.5 percent to 1,127.35 rupees on the fund buying after it had fallen 7.8 percent over the past four trading sessions.


* Ansal Properties & Infrastructure fell 3.4 percent to 30.10 rupees after Fitch Ratings downgraded the firm's long-term rating and revised outlook to negative from stable. The

stock earlier hit a multi-year low of 29 rupees.

* Truck and bus maker Eicher Motors Ltd rose 2.74 percent to 221.55 rupees after its board approved a buyback of 1.4 million shares at up to 691.68 rupees a share, more than three times its currently traded price.


* Unitech on 20.5 million shares

* GVK Power & Infrastructure on 17.1 million shares

* Suzlon Energy on 15.2 million shares

Sensex to bottom out by March - Macquarie

MUMBAI (Reuters) - Indian stocks will likely bottom out by March when foreign fund selling eases and corporate confidence returns but investors should not expect any fireworks in 2009, a senior official at Macquarie Securities said.

The benchmark index should sit between 7,500 to 10,500 points from now until February, and the year 2009 would be flat with a 10 percent upside, Stuart Smythe, senior managing director and head of equity India, told Reuters.

The index had touched a peak of 21,206.77 points in early January 2008.

"I think the slowdown will persist through February," he said in a interview.

"You have got to understand you have got concerns over widespread redemptions, many have literally closed their books and said 2008 is a write-off. They are saying let's come back to see in 2009," he added.

Indian shares have fallen 56 percent so far in 2008, making it one of the worst performing Asian markets, hurt by massive foreign fund outflows amid the deepest global financial crisis in 80 years that has savaged equity markets across the world.

Foreign funds have sold a net $13.3 billion in Indian shares so far in 2008 compared with record inflows of $17.4 billion in 2007 bolstered by a five-year bull run.

"People are reassessing whether they need to be in India at all given you have developed markets and world class companies that are cheaper than Indian stocks," Smythe said.

India was a one-way bet up to January this year. Now, with all that is going on, it has become imperative for good companies to come out and differentiate themselves, he said.

There is still a strong level of interest for Indian companies that are regional or global leaders and endowed with strong balance sheets, good earnings growth, low gearing and defensible market positions, he added.

"But global liquidity and the velocity of the same, which has really driven markets, have diminished massively," Smythe said.

"We have had now four quarters of EPS (earnings per share) and margin deterioration," he said. "Margin rebound will probably be the strongest positive indicator and that will be a quarter if not two quarters away."

U.S. automakers must change course to get bailout

WASHINGTON (Reuters) - U.S. auto executives pitched doom to Congress to win a bailout and left town empty handed. Now they will have to make a U-turn and convince lawmakers their industry has a prosperous future.

The chief executives of General Motors Corp, Chrysler LLC and Ford Motor Co never recovered politically after landing in Washington on their corporate jets with hats in hand.

A horrible week for the chiefs ended with their hopes for an immediate bailout dashed and Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi chastising them for sending mixed signals and not owning up to industry's problems.

"We want them to get their act together," Reid said.

Uncomfortable talking about business prospects and financial details in public, Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler spent two days doing just that in congressional hearings.

GM said it would need between $10 billion to $12 billion in bailout money while Ford and Chrysler sought $7 billion each.

Their message centered on a belief that the industry's outlook was so bleak that a collapse was possible. And because they employ nearly 250,000 people and impact 1-in-10 jobs nationally, insolvency of one or more of their companies would send shockwaves through the broader economy, they said.

Wagoner told the House Finance Committee that he did not like asking for money, but it was "reasonably probable" that some part of the U.S. auto industry "will not survive" if their request was rejected.

But Reid said at a news conference that GM, Ford and Chrysler were unable to "convince the Congress or the American people" that this "government bailout will be its last."

Pelosi was upset Detroit initially asked for congressional support for a merger. But when "they came to see us," she said, the message had changed to: "We need an infusion of cash."

The Democratic leadership, which supported a $25 billion bailout proposal that was derailed by Republican objections on Wednesday, wants Detroit now to demonstrate how the companies plan to overcome problems and compete with leaner foreign rivals.

"Until they show us the plan, we cannot show them the money," Pelosi said.

All three companies responded with statements. GM promised to "deliver a plan" that "shows them a viable General Motors." Ford plans to change course as well. "We have a great plan," the company said. Chrysler said it was "prepared to meet the "accountability and viability" requirements.

"One plan is what we're looking for," House Majority Leader Steny Hoyer said of congressional expectations for the industry in coming weeks.

The automakers pledged during their testimony to spend bailout money on operations and invest in new fuel efficiency technology - like better-performing gasoline engines, hybrids, and new electric cars.

They also promised to keep any investments using government cash in the United States.

GM, Ford and Chrysler had set broad restructuring plans earlier in 2008 and have added to them in recent weeks in response to the deepening downturn in sales.

The plans include paring capital spending and increasing targets for salaried employment cost cuts in North America. They also plan to delay some vehicle programs and scale back production at several plants.

"With the agreement that we've made with the (United Auto Workers) and our other productivity improvements, we can make cars, trucks, and utilities in the United States. We can do it profitably now," Mulally said this week.

Lawmakers gave few signs of what they want to see.

Senate Banking Committee Chairman Christopher Dodd said some in Congress were interested in prepackaged bankruptcy -- where contracts with labor and suppliers and terms with lenders are renegotiated up front.

But Pelosi rejected bankruptcy as an option for Detroit.

Indian property to fall further before funds bite

HONG KONG (Reuters) - Indian property prices are likely to fall by a quarter in the coming year as the global economic crisis saps homebuyer confidence, adding to the problems of capital-strapped developers.

A property market boom has been waning for a year, with land prices already falling about 15 percent from a mid-2007 peak, although forced sales have been rare. But consultants and investors at the MIPIM Asia conference in Hong Kong this week predicted tougher times ahead.

"We're expecting a horrible 2009," said Anshul Jain, chief executive for property services firm DTZ in India.

"Prices have already shown signs of coming off, and chinks in the armour are surfacing."

Indian property prices doubled in the two years after the country eased rules in early 2005 on inward investment in the construction industry, sparking interest in home-building among foreign funds.

Developers, sometimes in league with funds run by the likes of Morgan Stanley, Citigroup and Merrill Lynch, snapped up land.

The bigger firms, such as DLF Ltd and Parsvnath Developers Ltd, launched huge initial public offerings to fund new townships in a country where little housing had been built for 50 years.

But the sharp rise in prices, coupled with interest rate hikes designed to calm inflation in the booming economy, slowed home sales. And the global crisis has added to the gloom, with residential transactions down by half from a year ago.

"We could see a 20 or 25 percent price correction," said Anurag Mathur, joint India managing director at consultants Cushman and Wakefield. "There's a lot of pressure. Whether we reach distressed sales, only time will tell."


Faced with overheated markets, India followed the lead of China in clamping down on loans to the property sector -- a policy that will probably force some small and medium-size developers out of business in both countries.

The global credit crunch and a stock market slump cut off the supply of funds from capital markets. And now a drop in home sales is shrinking cash flow.

A barometer of the troubles is DLF's share price, which has tumbled more than 80 percent this year, compared to a 58 percent drop in BSE index.

Foreign investors, with their own economic worries at home and bargains popping up elsewhere, are unlikely now to jump into a market muddied by red-tape, land disputes and unclear titles.

But the funds already raised, somewhere between 75 and 100 of them, are waiting for developers to drop their pricing for joint ventures, so they can get the 30 percent internal rates of return they hanker for, even in a bad market.

"Right now our focus is on making sure we're buying good assets in the better locations, working with better developers and getting better terms," said Chetan Dave, chief executive at Sun-Appollo Real Esate Advisors, which manages a $630 million fund.

However, developers are still hoping that as inflation softens, falling mortgage rates will make homes affordable again, especially if they start building $60,000 apartments for the middle class rather than $1 million homes.

But financing deals, to perk the market up again, will not happen until developers get a better grasp on how far the market will fall, DTZ's Jain said.

"Private equity players think prices will fall more and developers are in the semi-denial stage," Jain said. "They were in complete denial a few weeks ago."

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.